July 31--The former chief financial officer of Sacred Heart Hospital was sentenced to a year in prison Thursday for his role in a massive fraud scheme that involved paying hundreds of thousands of dollars in kickbacks to doctors for referring patients.
The sentence imposed on Roy Payawal by U.S. District Judge Matthew Kennelly was far less than what was requested by prosecutors, who called for a term within federal guidelines that could have meant as many as 10 years behind bars. Payawal's attorneys asked for probation.
On Wednesday, Kennelly also cut a significant break to the alleged mastermind of the scheme, giving former Sacred Heart CEO Edward Novak 4 1/2 years in prison. Charles Nagelvoort, the hospital's former chief operating officer, is scheduled to be sentenced Friday.
Prosecutors argued the now-shuttered West Side hospital reaped nearly $35 million over the 12-year scheme by paying hundreds of thousands of dollars in kickbacks to doctors in exchange for referring patients on Medicare or Medicaid.
Many patients were taken to Sacred Heart from distant sites, admitted to the hospital for dubious medical reasons and given care that was substandard at best, prosecutors said. Meanwhile, the hospital was beset by problems, from poorly trained nurses to a maggot infestation in the intensive care unit that had to be quelled by dousing patients with bug spray, prosecutors have said.
As the hospital's financial chief, Payawal, 66, was in charge of entering and approving check requests for the doctors receiving kickbacks and "decided how to code the payments in the hospital's general ledger to conceal the true nature of those payments from outside financial analysts," prosecutors said in a recent court filing.
In sentencing Novak on Wednesday, Kennelly noted that while the case unfolded in April 2013 with shocking charges of unnecessary surgeries and dangerous oversedation of patients, those allegations "disappeared" by the time of trial, and in the end there was no proof that any patients were ever physically harmed.
jmeisner@tribpub.com
